Find a Tenant: Credit Check and Screening

Screening Tenants for Our Rental Property

Our rental property after a rare Texas snow.

So you just became a landlord and you want to know how to screen tenants and complete that tenant credit check?

Well, you are in luck. I just became a rental property owner myself and I learned how to properly screen tenants, including the credit check.

One of the great unknowns of becoming a landlord is how to screen tenants so that you can find the right people to live in your rental unit.

Lord knows you don’t want someone skipping out on you or beating up your home after you’ve spent time advertising your rental and fixing it up.

With the technology we have these days, it’s really very easy. But there are some things that can trip you up.

Know Your HOA Rules for Screening Tenants

First and foremost, you need to contact your home owners association and find out what their terms are for allowing tenants in the community. You might be surprised at how strict they are. For instance, my HOA requires that I only take tenants who are able to do a minimum of 12 month on the lease agreement.

Additionally, my HOA requires that I provide a criminal background check on my tenants and that I submit that to them, along with the proposed lease, and an additional information sheet, for their approval. Which can take up to a week. Don’t get me started on how much of a pita that is.

Have an Objective Standard When Screening

Secondly, and probably most importantly when it comes to dealing with prospective tenants, you need to develop an objective standard by which you judge each new tenant/applicant. What I mean is that you need a standard application process that you put each potential renter through that contains a standard scoring system to evaluate each tenant based on their own situation.

Said in another way, you need a checklist. I turned to www.mrlandlord.net to get all the materials I needed to help me screen my tenants, including a checklist. This checklist includes:

  • Financial Criteria
  • Cooperation/Reliability Criteria
  • Rental Stability Criteria

You score each of the points under each of these criteria headings and you come up with a total score. If your potential tenant meets or exceeds that score then they pass your application.

Having an objective standard in place when screening tenants makes your job so much easier and it gives you confidence that you are doing the right thing and finding the right renter.

The reason this is so valuable is that as a new landlord, you have no idea what constitutes a “good” tenant. And if you fear that the first person that comes along might be your only lead, without a standard, you might make a bad decision and end up with a bad tenant.

Use Pre-screening Questions

Finding the right tenant takes time. The last thing you want to do is waste time taking applications from or showing the unit to prospective tenants that aren’t even qualified based on known information.

For instance, I ask my tenants the following questions when they call or email about the unit:

  • When is your desired move-in date?
  • Can you do a 12 months lease? The HOA requires this.
  • Do you have pets or are you a smoker?
  • How many adults will be living in the home?
  • When is a good time for you to see the home this week? Please list a couple of days/times.

If the tenant says, “oh, I can’t do 12 months” or “I actually have a pet” then you’ve saved yourself anymore time spent dealing with this prospective tenant. On to the next one.

I made the mistake of not asking these questions once and wasted an hour of my time (two 30 min showings of the unit) because the tenant had a dog. I has assumed she read that on the listing. Never assume when your time is involved.

How to Do the Tenant Credit Check

There are lots of places online that will facilitate your tenant credit check. I do all of my tenant credit checks using www.rentersfriend.com TransUnion SmartMove. It’s a smooth as silk operation. All you do is collect your prospective tenants email address, give it to SmartMove, and they handle the rest. The tenant gets a request for application from SmartMove and then completes and pays for the application. They pay a one time fee of $25. They then complete the application and almost instantly a report is sent to your email.

The report contains a credit check (including score), criminal background check, and legal records check. They source their information from TransUnion, and multiple background check sites including FBI and terrorism lists.

Once I receive the report I plug the information into my prospective tenant checklist. If I need more information, I follow up with the tenant. Then, I’m able to give the tenant a yea or nay.

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There’s so much more I could share about this screening process, but I have to stop somewhere. Being a landlord has been fun so far, but there is no doubt that dealing with screening tenants has been the most challenging part for me. In my next installment I hope to cover agreements, deposits, receiving rent, etc.

What about you? Are you a landlord? Tell us your tenant screening process? Have a question about bringing on tenants? Ask away.

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Last Edited: April 7, 2014 @ 3:02 pm
About Philip Taylor

Philip Taylor, aka "PT", is a husband and father of two. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or view the Philip Taylor+ Google profile.

Comments

  1. I bet having a list of questions really does help out. I’ll have to look some up in a few years when we rent out our townhosue!

  2. Wow I love the RentersFriend.com suggestion – what a great solution! The criminal background check and legal records check are probably the most valuable parts of the website – credit might not mean anything if the potential tenants are sitting on a pile of money or have excellent incomes. Thanks for a fantastic article!

  3. Thanks for “Renters Friend”!  We’ve been lucky enough to have military tenants for the last few years, but this is on our checklist for the next tenant change.
     
    We advertise as “pet friendly”.  Tenants will almost always ignore the “No pets” rule anyway, and it’s easier to be up front about it.  We put a pet-damage clause in the lease and it’s usually just a carpet cleaning that we would have done anyway.  
     
    The big advantage of “pet friendly” is that we get a lot more phone calls from tenants who are happy to pay top market rent so that they can bring their pet(s), and we can get away with leaving the 10-year-old carpet in the house for the tenants instead of recarpeting.  The tenants are also on their best behavior because they know how hard it’d be to find another pet-friendly place…

    •  @Nords Great approach! If I didn’t have engineered plank hardwood floors I’d be right there with you, Nords. The floors are nice and mostly durable, but wouldn’t hold up to repeated dog scratches. I can’t risk it.

      •  @Philip Taylor  Yeah, I don’t know if a damage deposit could cover that repair.  Let alone the hassle factor…

    •  @Nords  Do you charge extra for service dogs or follow the law?

      • Here’s what our lease form says about animals:  
        “ANIMALS. Tenant shall be entitled to keep domestic dogs, cats, birds, or other pets, however at such time as Tenant shall actually keep any such animal on the Premises, a portion of Tenant’s security deposit shall be non-refundable and used upon the termination or expiration of this Agreement for the purposes of cleaning the carpets of the building. In addition, since pet food is a major cause of rodent infestations, Tenant shall be responsible for the cost of repairs caused by rodent damage.”
         
        … and we follow the law.
         
        Never had a complaint from a pet-owning tenant, because they usually have a tough time finding a pet-friendly place.  
         
        Frankly the humans have caused far more damage than the animals, but the tenants have paid for whatever damage they’ve caused.

  4. OrnellaGrosz says:

    Awesome advice and tips, I’m going to send this to a family member who might be able to get some ideas from your post.

  5. Good points!  When I was a landlord, I also did a unlawful detainer search.  I wanted to know if the tenant ever was evicted.

  6. My mom owns a rental property and I manage it for her.  We went through the city to get some free information, screenings, forms, etc.  Super helpful when you start the processes.  I think a 12 month lease minimum is a must, plus no smoking and pets, definitely helps narrow it down.

  7. candygirl7 says:

    A wonderful tool for pre-screening a prospective tenant is Facebook. As a landlord with 10 years experience, I have dodged a lot of bullets by going to the applicants Facebook and MySpace page.  I have been able to eliminate a potentially unsavory tenant by doing this—you will not believe what some folks post about themselves.

  8. Our HOA doesn’t have an rules that we had to follow, but I got thorough with our tenants.  I did a full credit and background check, called their current landlords and had them give me current pay stubs.

  9. We are having to live with our son due to bad credit via medical bills, and the fact that my husband is a master’s candidate not currently employed. We were told we had a place and gave our previous landlord notice, but it fell through. We have inherited enough money to live on for three years, we only need two years. We are willing to pay the last 3-6 months’ rent up front in addition to first month and deposit, but we don’t fit the criteria, so no one will talk to us. We will move back to the (expensive) city to plant churches after 2 years of grad school.  Any suggestions?

  10. Our son with PTSD has a service dog and lives with us. Should we expect potential landlords to skirt the law and reject us or charge more for the dog. This would violate the ADA, but how to prove it?

  11. Donna Freedman says:

    I used to manage a small apartment building, and learned to say right upfront that there would be a credit and background check. That eliminated a whole bunch of people right off the bat, i.e., neither their time nor mine was wasted on a walk-through if they knew they wouldn’t be approved.
    Some people would protest: “Yeah, I have some debt but I cut up my cards!” (how do the owners know you did — and even if you did, how do they know you won’t just get new ones?) or “That debt was from my spouse!” (that’s a tough one, but YOUR NAME is on the card and you are responsible).
    So start all phone calls with, “Thanks for your interest in the property. If you’d like to come and see it, please bring a current, state-issued photo ID and the $25 fee for a credit and background check.” Sometimes you’ll get an, “Oh. Well, thanks anyway.” Sometimes you’ll get, “Is that really necessary?” Once or twice I got a “click…(dial tone).”
    Love the idea of Facebook, by the way…It helps to see a photo of Prospective Tenant with his boa constrictor wrapped around his waist, or lying unconscious next to a pile of beer cans while his friends draw on his face with Sharpies.